Asbestos burden leads T&N to cut 1,500 jobs

The cost of a hefty reorganisation to trim costs could result in around 1,500 jobs going this year at motor components maker T&N. But the company expects `comparatively few’ job losses among its 6,000 British personnel. Last year the UK business was `a good steady performer,’ said Ian Much, the chief executive, with turnover up […]

The cost of a hefty reorganisation to trim costs could result in around 1,500 jobs going this year at motor components maker T&N.

But the company expects `comparatively few’ job losses among its 6,000 British personnel.

Last year the UK business was `a good steady performer,’ said Ian Much, the chief executive, with turnover up 2.5% at £472m and profits up 1% at £63.8m.

T&N had to meet the cost of capping its asbestos burden (£515m) and provisions against its still abortive pursuit of German pist-ons group Kolbenschmidt (£23.4m).

Of the job losses this year, the heaviest fallout is expected in Germany and France. The overall exercise targets annual savings of up to £15m.

The 15% fall to £172m in operating profits of the on-going business on sales up 2.5% at £1.9bn, was down to a mix of strong competition in depressed markets (notably heavy trucks), hefty de-stocking – particularly in Germany where profits more than halved to £13.8m – redundancy costs and adverse exchange rates.

While operating margins across its five divisions fell to 9.1%, City watchers thought that in such a tough year, it was not too bad.

Sir Colin Hope, chairman, believes the setback `transitory’ and looks for swift recovery, with the annual average margins restored to 10% or more.

But that looks beyond T&N’s scope this year. Robert Speed, of stockbroker Henderson Crosthwaite, is going for 9.4% with operating profits of around £153m.

He has the shares on buy – arguing that with asbestos capped and major cost savings in prospect, the company is well set for the future.